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More On Legal & Compliance

from The Advisor's Professional Library

The Few and the Proud: Chief Compliance Officers
CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.

Agency and Principal Transactions
In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.

The SEC announced Monday the appointment of Julie Riewe and Marshall Sprung as co-chiefs of the Division of Enforcement’s asset management unit, succeeding Bruce Karpati, who led the unit as a co-chief since its January 2010 inception but who left the commission in May.

Since May 2012, both Riewe and Sprung had been serving as deputy chiefs of the unit, whose charter, according to the SEC, is to focus “on misconduct by investment advisers, investment companies and private funds.”

Riewe (right), who joined the SEC in 2005, and Sprung, who joined the SEC in 2003, became deputy chiefs following the departure of the Asset Management Unit’s original co-chief, Robert Kaplan.

In an interview with AdvisorOne after he joined the law firm Devevoise & Plimpton on June 1, 2012, Kaplan argued that “the single most significant trend in securities enforcement today is the increased allocation of resources to misconduct by investment advisors.” At that time, the unit comprised 75 lawyers and industry experts who focused on investigations related to potential violations of securities laws by advisors to hedge funds, private equity funds, mutual funds and separately managed accounts.

Kaplan said the unit had been “unprecedented in its success,” which he attributed to hiring more staff members with industry expertise, the unit’s focus on proactively identifying misconduct earlier, and “breaking down silos” by collaborating with other SEC divisions.

According to the SEC’s release announcing the new appointments, both Riewe and Sprung have already contributed significantly to the Asset Management Unit’s actions.

Also on July 1, the commission announced the appointment of Timothy Henseler as director of the office of legislative and intergovernmental affairs, with responsibility for advising the SEC chairman, commissioners and staff on legislative matters, for liasing with congressional committees and staff, and in preparing testimony for congressional hearings. Henseler joined the SEC in 2003 in its Boston office, was formerly the deputy director of the office and has been acting director since July 2012; before joining the commission, Henseler served on the staff of Sen. Carl Levin (D-Mich.) from 2001 to 2003.